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Climate Finance
 

Introduction

The contribution of countries to climate change, and their capacity to prevent and cope with its consequences, varies enormously. The Convention and the Protocol therefore foresee financial assistance from Parties with more resources to those less endowed and more vulnerable. Developed country Parties (Annex II Parties) shall provide financial resources to assist developing country Parties in implementing the Convention. To facilitate this, the Convention established a Financial Mechanism to provide funds to developing country Parties.

The Convention, under its Article 11, states that the operation of the Financial Mechanism is entrusted to one or more existing international entities. The operation of the Financial Mechanism is partly entrusted to the Global Environment Facility (GEF). At COP 17 Parties decided to designate the Green Climate Fund (GCF) as an operating entity of the Financial Mechanism of the Convention, in accordance with Article 11 of the Convention. The Financial Mechanism is accountable to the COP, which decides on its climate change policies, programme priorities and eligibility criteria for funding.

The Kyoto Protocol also recognizes, under its Article 11, the need for the Financial Mechanism to fund activities by developing country Parties.

In addition to providing guidance to the GEF, Parties have established four special funds: the Special Climate Change Fund (SCCF), the Least Developed Countries Fund (LDCF), both managed by the GEF, and the GCF under the Convention; and the Adaptation Fund (AF) under the Kyoto Protocol.

At COP 16 Parties decided to establish the Standing Committee on Finance to assist the COP in exercising its functions in relation to the Financial Mechanism of the Convention.

Launched at COP 17 and extended for one year at COP 18, the work programme on long-term finance concluded its work at COP 19 in Warsaw. COP 19, in decision 3/CP.19, included activities on long-term climate finance for the period 2014-2020. These include biennial submissions by developed country Parties on their strategies and approaches for scaling up climate finance from 2014 to 2020, in-session workshops to facilitate deliberations on long-term climate finance and biennial high level ministerial dialogues on climate finance starting in 2014. More information here.

Funding for climate change actvities is also available through bilateral, regional and multilateral channels. More information on funding is available here.

 
Climate Finance in the Paris Agreement New!
 

Article 9 of the pdf-icon Paris Agreement stipulates that developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention. Other Parties are encouraged to provide or continue to provide such support voluntarily.

Furthermore, as part of a global effort, developed country Parties should continue to take the lead in mobilizing climate finance from a wide variety of sources, instruments and channels, noting the significant role of public funds, through a variety of actions, including supporting country-driven strategies, and taking into account the needs and priorities of developing country Parties. Such mobilization of climate finance should represent a progression beyond previous efforts.

In addition, Article 9 states that the provision of scaled-up financial resources should aim to achieve a balance between adaptation and mitigation, taking into account country-driven strategies, and the priorities and needs of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change and have significant capacity constraints, such as the least developed countries and small island developing States, considering the need for public and grant-based resources for adaptation.

With regard to ex-ante communication of information, developed country Parties shall biennially communicate indicative quantitative and qualitative information related to paragraphs 1 and 3 of Article 9, as applicable, including, as available, projected levels of public financial resources to be provided to developing country Parties. Other Parties providing resources are encouraged to communicate biennially such information on a voluntary basis.

The global stocktake referred to in Article 14 of the Agreement shall take into account the relevant information provided by developed country Parties and/or Agreement bodies on efforts related to climate finance.

With regard to the issue of transparency of support, developed country Parties shall provide transparent and consistent information on support for developing country Parties provided and mobilized through public interventions biennially. Other Parties are encouraged to do so.

The Financial Mechanism of the Convention, including its operating entities, and the Standing Committee on Finance, shall serve as the financial mechanism of this Agreement. In addition, Article 9 stipulates that the institutions serving this Agreement, including the operating entities, shall aim to ensure efficient access to financial resources through simplified approval procedures and enhanced readiness support for developing country Parties, in particular for the least developed countries and small island developing States, in the context of their national climate strategies and plans.

At COP 21, it was also decided that developed countries intend to continue their existing collective mobilization goal through 2025 in the context of meaningful mitigation actions and transparency on implementation, and that prior to 2025 the Conference of the Parties serving as the meeting of the Parties (CMA) to the Paris Agreement shall set a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries.

Furthermore, the COP resolved to enhance the provision of urgent and adequate finance, technology and capacity-building support by developed country Parties in order to enhance the level of ambition of pre-2020 action by Parties, and in this regard strongly urges developed country Parties to scale up their level of financial support, with a concrete roadmap to achieve the goal of jointly providing USD 100 billion annually by 2020 for mitigation and adaptation while significantly increasing adaptation finance from current levels and to further provide appropriate technology and capacity-building support. Parties also decided to conduct a facilitative dialogue in conjunction with the twenty-second session of the Conference of the Parties to assess the progress in implementing decision 1/CP.19, paragraphs 3 and 4, and identify relevant opportunities to enhance the provision of financial resources, including for technology development and transfer and capacity-building support, with a view to identifying ways to enhance the ambition of mitigation efforts by all Parties, including identifying relevant opportunities to enhance the provision and mobilization of support and enabling environments.

More information on the Paris Agreement is available pdf-icon here.

 
Development of modalities for the accounting of financial resources provided and mobilized through public interventions in accordance with Article 9, paragraph 7 New!
 

In the context of the adoption of the Paris Agreement, COP 21 requested the Subsidiary Body for Scientific and Technological Advice (SBSTA) to develop modalities for the accounting of financial resources provided and mobilized through public interventions in accordance with Article 9, paragraph 7, of the Agreement for consideration by COP 24, with the view to making a recommendation for consideration and adoption by CMA 1. Article 9, paragraph 7, stipulates that developed country Parties shall provide transparent and consistent information on support for developing country Parties provided and mobilized through public interventions biennially in accordance with the modalities, procedures and guidelines to be adopted by CMA 1, and that other Parties are encouraged to do so.

 
Biennial Assessment and Overview of Climate Finance Flows
The Standing Committee on Finance conducted its first Biennial Assessment and Overview of Climate Finance Flows in 2014

pdf-icon 2014 Biennial Assessment and Overview of Climate Finance Flows Report

pdf-icon Summary and Recommendations by the Standing Committee on Finance on its 2014 Biennial Assessment and Overview of Climate Finance Flows

 
Climate Finance Data Portal
The portal is a gateway to information on activities funded in developing countries to implement the Climate Change Convention.
Click here for more information.

 
Other Climate Finance Resources
Financial needs assessments

More information on the National Economic, Environment and Development Study (NEEDS) for Climate Change Project. The synthesis report can be found pdf-icon here.

More on the NEEDS Project

Investment and financial flows to address climate change: An update

The AWG-LCA 2 has requested the UNFCCC secretariat to prepare an pdf-icon update (FCCC/TP/2008/7) of the technical paper on investment and financial flows to address climate change, taking into account paragraph 1 of the Bali Action Plan. 

More on investment and financial flows to address climate change.